Most Asian currencies weakened slightly on Tuesday after US President Donald Trump warned on the cusp of a meeting with Chinese President Xi Jinping that tariffs on goods imported from China were likely to be raised. Trump's comments soured the mood in Asian markets that have been in a wait-and-see mode ahead of Trump's meeting with Xi at the G20 summit in Argentina starting on Friday.
Trump's tough rhetoric bolstered support for safe haven currencies with the dollar index, a gauge of its value versus six major peers, keeping steady at 97.06 - near its highest since Nov. 15.
Most regional currency markets were negatively impacted by the stronger greenback, as the dollar held gains it made on
Trump's comments watering down hopes of a near-term trade truce with China.
Analysts at MIDF Amanah Investment Bank said every 1 percent fall in US demand for Chinese products would reduce economic growth in China and globally by 0.72 percent and 0.71 percent respectively.
The economies of Asian countries such as Taiwan, Hong Kong, South Korea, Malaysia and Singapore could contract would be affected in the range of 0.14 percent to 0.2 percent due to the trade war, the MIDF analysts said.
The Indonesian rupiah fell by as much as 0.3 percent, while the Philippine peso, the Malaysian ringgit and the Chinese yuan all weakened as much as 0.2 percent against the dollar.
The Korean won also weakened, but in a narrower range of up to 0.1 percent.
"The latest bout of USD resilience... is borne out of market nervousness and not from any renewed Fed hawkishness," OCBC Bank analysts said in a note.
The Thai baht bucked the trend, firming as much as 0.2 percent.
Thailand's manufacturing production index (MPI) rose 4.08 percent in October from a year earlier, beating the 2.8 percent forecast by a Reuters poll.
It was led by increased production of cars and car engines, air-conditioners and petroleum, the Industry Ministry said on Tuesday.
Net oil importers such as India and Indonesia benefited from a fall in prices on Tuesday in cautious trade ahead of the G20 gathering and next week's OPEC meeting in Austria.
Comments
Comments are closed.